Ball Corp. faces a statement of objections cataloging the European Commission’s concerns over its 4.4 billion-pound ($6.9 billion) purchase of Rexam Plc months after regulators said the deal may increase the price of aluminum cans and bottles, according to two people familiar with the matter.
Ball will be told as soon as this month that the deal risks being blocked unless the U.S. company offers adequate remedies, said the people, who asked not to be identified because the European Union merger regulator’s review is private. Statements of objections are standard practice in complex merger cases where no concessions have yet been made.
The Ball-Rexam tie-up is the biggest takeover in metal and glass packaging, according to data compiled by Bloomberg. Both Ball and London-based Rexam supply beverage containers to Coca-Cola Co. and brewer Anheuser-Busch InBev NV. The combined company will have about 22,500 employees and $15 billion in sales and create $300 million in annual cost savings, according to Ball.
Ball will pay Rexam as much as 302 million pounds, or 7 per cent of the deal value, if the transaction isn’t completed because regulatory conditions aren’t satisfied. Lower fees will apply if the sale falls through for other reasons. The companies expect the takeover to be complete in the first half of 2016.
Ball shares were down 0.1 per cent at 12:43 p.m in New York trading on Friday after falling as much as 1.6 per cent. Rexam shares fell 0.4 per cent in London after dipping as much as 6 per cent.
The Brussels-based commission and Rexam declined to comment. Ball didn’t immediately respond to requests for comment.
The commission said its in-depth probe will focus on the importance of having a sufficiently wide network of production facilities across Europe and the barriers to entry due to the significant investment required to build a plant.
The transaction, which aims to create the world’s biggest maker of food and beverage cans, would give Ball and Rexam around two-thirds of the plants located in Europe, the EU regulator said in July.
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